PSC: Proposed surcharge adds nothing to final utility costs

PSC: Proposed surcharge adds nothing to final utility costs

February 27th, 2013 in News

A Public Service Commission analysis says electric utility customers will pay the same, in the end, for infrastructure improvements - whether they pay smaller increases over time through a proposed surcharge now being considered by Missouri lawmakers, or at the end of a utility's regular rate case.

State Sen. Mike Kehoe, R-Jefferson City, asked for the study last week, as the Senate's Commerce, Consumer Protection, Energy and the Environment Committee considers whether to recommend full Senate debate on Kehoe's proposal to let electric utilities make infrastructure repairs and add those costs to consumers' bills, even before the PSC can give them a thorough study in a full-blown rate case.

The costs would appear on customers' bills as an "infrastructure system replacement surcharge," or ISRS.

Kehoe asked the PSC to analyze the financial impact of the surcharge, if lawmakers approved it and Missouri's three regulated utility companies used it.

Using information from the three utilities - St. Louis-based Ameren Missouri, Kansas City-based KCP&L and Joplin-based Empire District Electric Co. - the commission calculated the additional, estimated costs if the improvements were added to bills as an ISRS, or if the same improvements were included as part of a company's request for increased rates, and showed those figures for each company's various rate classes.

In a footnote on the separate page for each company's "ISRS Charge Examples," the PSC said: "The revenue requirement per (each) rate class with ISRS or without ISRS (normal rate case) will not vary ($0 difference) except for timing difference."

After reviewing the PSC's eight-page report, Kehoe told the News Tribune: "Just based on the improvements that a utility company could do, there would be no increase in costs to the customer - on that improvement.

"That's what we've been saying, but there's a lot of misinformation out there that says it's going to be Armageddon, and rates are going to go through the roof."

The Fair Energy Rate Action Fund (FERAF) disagrees with Kehoe's view and, with the House Utilities Committee scheduled to hear testimony at 8 a.m. this morning on Rep. Jeanie Riddle's version of the bill, the group issued a news release Tuesday afternoon urging opponents to tell their lawmakers "to stand up for you against the power companies trying to get more of your money."

FERAF is a group representing consumer groups, including the AARP, Consumers Council of Missouri and the Missouri Association for Social Welfare, and utility users, including the Missouri Retailers Association, Ford Motor Co. and Noranda Aluminum.

The FERAF release repeated charges the group has made before - that the proposed surcharge authority "would allow energy companies to dig even deeper in our pockets to charge more money for the same service."

Kehoe countered the additional costs are for repairing aging equipment.

"Under the ISRS, it's a slow and steady method," he said, "so you don't have the interest and carrying charges, you don't have all the attorneys' fees and customers fully see what improvements are being done."

In its release, FERAF said: "The legislation ... would allow energy companies to put in place a new surcharge on consumers and completely bypass real oversight with the Missouri Public Service Commission.

"That means the utilities could raise their customers' rates at any time without the consumer and regulatory process put in place to keep Missouri consumers and small businesses from being gouged."

Kehoe disagreed.

The PSC has "two opportunities to review what is done," he said. "At the very beginning, they have (five months) to review those (proposed) charges - and they can say no at that time.

"Then, when they do the full-blown rate case for all the ISRS charges after the three-year period, they have another opportunity - another bite at the apple, if you will - to look at the charges and decide if they were prudent.

"And they can charge back the utility company if they weren't prudent ... and the customer, then, would get a refund, with interest."

Kehoe hopes the Senate can begin debating his bill before the mid-March spring break.